2024 (1) TMI 893 - AT - Service Tax

Abatement under N/N. 1/2006-ST dt. 01/03/2006 - Construction of Complex Services - period 16/06/2005 to 31/03/2008 - HELD THAT - It is not in dispute that for the period prior to 01/06/2007, the appellant has rendered construction of complex services, which included both material as well as service components; hence squarely fall under the category of Works Contract Service . Also, during the course of hearing, the appellant has submitted the VAT returns filed by the appellant during the relevant period under Works Contract Service. In these circumstances, denial of benefit of composite scheme under Works Contract Service w.e.f. 01/06/2007, is bad in law and levy of service tax prior to 01/06/2007. when the services are in the nature of Works Contract Service also cannot be sustained in view of the judgment of the Hon ble Supreme Court in the case of Total Environment Building Systems (P) Ltd. Vs. Deputy Commissioner of Commercial Taxes 2022 (8) TMI 168 - SUPREME COURT . The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case are the classification of services provided by the appellant, denial of benefit of exemption notification, and the applicability of Works Contract Service for ongoing contracts.

Classification of services provided:
During the relevant period, the appellant provided construction services for the project 'Skyline Kottayam' classified under 'Construction of Complex Service' or 'Commercial or Industrial Construction Service'. The appellant discharged service tax after availing abatement but later started discharging service tax under Works Contract Service. The dispute arose when a show-cause notice was issued proposing to deny the benefit of exemption notification and for recovery of the service tax short paid. The appellant contended that the services provided were correctly classifiable under 'Works Contract Service' and not 'Construction of Residential Complex Services'. The Commissioner rejected their contention, leading to the present appeal.

Denial of benefit of exemption notification:
The appellant argued that the denial of the benefit of the composite scheme under Works Contract Service was unjustified. They cited the judgment of the Hon'ble Supreme Court in the case of Total Environment Building Systems (P) Ltd. Vs. Deputy Commissioner of Commercial Taxes, stating that service rendered being in the nature of 'Works Contract Service' should not be chargeable to service tax levy for the period prior to 01/06/2007. The appellant maintained that since they had discharged service tax under 'Works Contract Service' after 01/06/2007, the service tax paid under the composite scheme was in accordance with the law.

Applicability of Works Contract Service for ongoing contracts:
The Tribunal found that for the period prior to 01/06/2007, the appellant had rendered construction services falling under the category of 'Works Contract Service'. The denial of the benefit of the composite scheme under Works Contract Service was deemed unlawful. Citing the judgment of the Hon'ble Supreme Court, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any.